Forum selection clauses (“FSC”) are very common in both domestic and international contracts. In Bremen v. Zapata Off-Shore Company (“Bremen”), 407 U.S. 1 (1972), the Supreme Court established basic standards for the enforceability of such clauses. Relying on Bremen standards, courts today generally enforce FSC. However, the vagueness of Bremen standards leaves room for a party to resist enforcement. The result may be delay and inefficiency. The Supreme Court has said that arbitration clause is a form of FSC, but it has applied different standards for the enforcement of arbitration clauses from FSC. This article argues for a reformulation of Bremen standards in case of international commercial agreements subjecting FSC to the same standards that apply to arbitration in general. Under this approach courts will discard vague concepts such as “reasonableness” and “fairness” and will restrict the public policy limitation to that applicable to ordinary contractual terms. Analysis of the enforceability of a FSC should apply only to the FSC itself not the contract as a whole. This approach will both protect the reasonable expectations of the parties as reflected in their contract and will increase commercial and judicial efficiency.

This article argues also for two other changes in the law regarding interpretation of FSC: (1) A FSC should be interpreted according to the law of the chosen court. This interpretation should apply not only when the parties have included a choice-of-law clause in their agreement but also when they have failed to do so. (2) In addition, as a matter of policy, FSC should be interpreted as exclusive, unless the clause contains clear language to the contrary. These interpretations reflect the majority view as expressed in international conventions on jurisdiction and arbitration, and, more importantly, they carry out the reasonable expectations of the parties.

This article deals with FSC in commercial international transactions. Borrowing from definitions contained in the 2005 Hague Convention on Choice of Court Agreements, we intend by “commercial” a transaction in which no natural person acting primarily for personal, family or household purposes is a party. Thus, this article does not apply to FSC in consumer contracts. We intend by “international”, a transaction that is not local. A local transaction is a transaction in which all the parties are resident in the same country and their relationship and all other elements relevant to their dispute (other than the choice of the foreign court) are connected only with that country.

Part I of this article discusses some basic concepts regarding FSC and deals with the evolution of the enforceability of FSC, before and after Bremen. The section concludes by identifying a number of still-unanswered questions. Part II compares the treatment of these clauses in international treaties. Part III draws a parallel with the treatment of arbitration clauses. The discussion of the analogy between arbitration and FSC lays the ground work for the argument that the standards for enforceability for arbitration and FSC should be the same. Part IV provides answers to the unsolved questions identified in Part I. These answers are based on principles of freedom of contract, efficiency, historical development, and international uniformity. Part V is a short conclusion.